RIO DE JANEIRO: Latin American currencies traded mixed on Thursday as investors waited for clear signs on the prospects of another round of monetary stimulus from the US Federal Reserve.
Fed Chairman Ben Bernanke may reveal the central bank's next move during a key speech at a meeting of central bankers in Jackson Hole, Wyoming on Friday. Monetary stimulus from the United States generally boosts dollar inflows in emerging countries.
The Mexican peso lost 0.6 percent to 13.4000 per dollar and the Brazilian real was little changed.
"The markets are in a general risk-off mood, everybody is kind of beholden to central bank moves beginning with tomorrow's Jackson Hole," said Tony Volpon head of emerging markets research for the Americas at Nomura in New York.
A mixed bag of US economic data released on Thursday further muddied the waters around Fed intervention. US consumer spending grew in July, but the number of Americans filing for jobless benefits was unchanged last week, indicating a flat labor market. Volpon said sluggish growth and the upcoming US presidential elections increased the chances for Fed action.
Brazil's real was little changed on Thursday after Finance Minister Guido Mantega said the government will keep favoring a weaker currency to boost competitiveness.
Brazil's central bank cut its benchmark interest rate on Wednesday to a record low 7.5 percent, but said that a further rate cut may not be needed or could be smaller as the economy picks up.
The past year has seen aggressive rate cuts and more than a dozen government stimulus packages aimed at reviving Brazil's economy, which is expected to grow less than 2 percent this year. This is the first time the central bank signaled that the easing cycle may be over.
Yet some analysts say it may be too early to expect a significant improvement in the world's sixth largest economy.
"We think that the consensus expectation for a strong rebound in growth over the next 6-12 months is overly optimistic and remain of the view that rates will stay lower, for longer, than the market currently anticipates," research firm Capital Economics said in a statement.
Brazil's real suffered large losses earlier this week on expectations the central bank would allow $4.5 billion in swaps originally sold to support the currency to expire on Monday, reducing dollar liquidity in the market.
The real has been locked in a narrow range of 2.0-.2.1 per dollar since early July as the central bank has intervened whenever the currency approached the band's edges. The bank might decide to let the contracts expire on Friday if indications of additional Fed measures spur optimism causing the real to stregthen.
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